Recently, the New York Department of Labor ruled that two former Uber drivers, Jakir Hossain and Levon Aleksanian, were employees rather than independent contractors, making them eligible for unemployment benefits. As we wrote about in a previous blog, “on-demand” ride-hailing companies sometimes choose to classify their drivers as contractors rather than as employees. Unlike employees, contractors are afforded fewer protections and rights under state and federal employment laws, making them cheaper to employ. Hiring contractors helps companies within the gig economy industry increase their profits.
According to Uber, drivers enjoy more flexibility by being classified as contractors. Uber noted that if drivers were classified as employees, they would earn a predetermined hourly wage, have set shifts, and would not be able to provide their services to other ride-sharing companies.
However, some ride-sharing drivers want to enjoy protections traditionally granted to employees. JHossain and Aleksanian applied for unemployment benefits after having their driver accounts deactivated by Uber. However, they did not receive their rulings from the New York State Department of Labor until August and September, respectively. Usually, applications for unemployment benefits take weeks rather than months to review.
It’s important to note that the decisions only concern Hossain’s and Aleksanian’s eligibility for unemployment benefits, and do not imply that they are entitled to other employee protections. Also, since the New York regulator reviews all cases on an individual basis, the rulings in the cases of Hossain and Aleksanian won’t necessarily impact other ride-sharing drivers.
Employee classification in other states
In other states, ride-sharing drivers have successfully managed to change their contractor status. Two former Uber drivers were deemed eligible for unemployment benefits in California, and the labor commissioner of Oregon issued a statement declaring that he views Uber drivers as employees.
In other states, such as Florida, Uber successfully managed to appeal a ruling that declared an ex-driver eligible for unemployment benefits. Even some unemployment claims filed by former Uber drivers in New York State have been appealed.
Right now, Uber is facing multiple lawsuits when it comes to the employment status of drivers. Much of the controversy facing Uber and similar ride-sharing platforms stems from a single issue: how do workers today fit into our traditional notions of employees and contractors?
Since Uber has gained so much momentum in the last few years, many believe that the company could survive a shift to classifying its drivers as employees rather than independent contractors. Others believe the nature of ridesharing services lends itself to hiring independent contractors. Currently, the state of the law is in flux and a legal consensus on this issue is unlikely to emerge anytime soon.